Govt not 'averse' to vote in parliament on retail reform

NEW DELHI (Reuters) - The government failed on Wednesday to persuade the opposition to drop its demand for a vote on a recent decision to allow foreign supermarkets to set up shop, worsening a standoff that has paralysed parliament and jeopardised economic reforms.

A meeting between Parliamentary Affairs Minister Kamal Nath, the government's main trouble-shooter in parliament, and the main opposition Bharatiya Janata Party (BJP), produced no breakthrough.

The BJP and left-wing parties are demanding a vote on the measure, passed by executive order in September, to allow 51 percent foreign investment in domestic multi-brand retailers. Prime Minister Manmohan Singh's minority coalition government strongly resists such a move and has called instead for a debate.

If the government lost the vote it would be an embarrassing setback on a policy on which it has staked so much political capital. It would also raise questions about the possibility of further economic reforms to boost sluggish growth.

The government's decision to allow foreign retailers such as Wal-Mart (WMT.N) into India was seen by economists and business leaders as a long overdue step forward in liberalising the economy. But critics say it will destroy millions of jobs and jeopardises the livelihoods of mom-and-pop store owners.

With a slew of state elections due over the next year and national elections scheduled for 2014, opposition parties have launched a concerted attack on the government's flagship reform, seeking to highlight the fact that even Singh's allies, fearing a voter backlash, are not fully on board with it.

Placard-waving chanting opposition lawmakers have disrupted parliament with their demands for a vote. Parliament has barely sat since the winter session began nearly a week ago.

Singh said on Tuesday that the government was confident it had the votes, while Nath said it was not "averse" to a vote.

That was interpreted by many in the Indian media to mean the government had agreed to a vote, although no official has explicitly backed such a move. Nath said the decision should be left to the Speaker.

"The government wants a debate without voting. We said if the government is confident of its numbers why is it shying away from debate under the voting provision?" the BJP's leader in parliament, Sushma Swaraj, said after Wednesday's meeting.

Nath said he had told the BJP leaders that most parties favoured a discussion on the supermarket reform not a debate.

For the government to win the vote it would need the help of two major regional parties, which are not part of the coalition but often vote with it in parliament. However, that is problematic for two reasons -- both parties oppose the reform and neither have always been reliable partners.

Financial markets are already concerned about the fate of insurance, pension and banking bills that were due to be voted on during the month-long winter session.

(Writing by Ross Colvin, additional reporting by Satarupa Bhattacharya; Editing by Sanjeev Miglani)